Thursday, September 15, 2011

Why There Are No "Declarations of War" - A War Profiteering Primer

The Heady Memory of 1941

This was the last time that the United States Congress stood boldly enough to declare war.  This notable event occurred while the wreckage of the US Pacific Fleet was still smoldering in Pearl Harbor, Hawaii.

This is what it looks like. "Formal Action Quickly Follow's FDR's Message"
The World War which ensued quickly engulfed the European Axis powers with similar declarations of war on Germany and Italy.  Whether from movies or history, most Americans are familiar with the story from this point.  ("PNAC" is the acronym for "Project for the New American Century")

PNAC Statement of Principles - the "New Pearl Harbor"(Read Wiki Article here.)

Section V of Rebuilding America's Defenses, entitled "Creating Tomorrow's Dominant Force", includes the sentence: "Further, the process of transformation, even if it brings revolutionary change, is likely to be a long one, absent some catastrophic and catalyzing event––like a new Pearl Harbor."

Just stay clear of an actual Declaration of War, whatever you do.

Because MeanMesa very thoughtfully included in this post's title the word  "primer,"  its extended length can be, somewhat, validated.  A major chunk of the massive national debt arising from the Bush Wars can be attributed to war profiteering, but that outrage can be stifled by a lack of both precedent and detail in the contemporary media's "word salad."

So, relax on a cool, high desert evening, make a nice cup of tea, settle into your Lazy Boy with a warm dog next to your feet and let's "drill down" a little to see what's at the bottom of this pit.

Harry Truman's Almost Forgotten Battle
  Against War Profiteering

Just as is the case with many aspects of 21st Century US social culture, war profiteering has matured since the coarser days the practice followed in the 1940's.  Not only have the mechanisms of such schemes become far more sophisticated, the "take" has grown an unsettling number of extra "zeroes," too.

FDR faced a Pacific threat almost without a Pacific Fleet after Pearl Harbor.  The nation was cast into a "results are everything" mode of military procurement where the predictable peccadillos of war profiteering had to be overlooked in favor of military production.

However, after Truman became President upon FDR's death, WWII was entering a more matured procurement phase, one which left egregious war profiteering with far less public cover compared to the period of desperation immediately after the Japanese attack.  

Here, MeanMesa will temporarily "relinquish the steering wheel" to present a short historical foundation with excerpts from another, very nicely written blog, Last Left Turn Before Hooterville - November, 2006. (Read the whole article here. Links remain enabled for further reading.)

Last Left Turn Before Hooterville

Outlaw War Profiteering!

November 17, 2006

As in World War II, we need to take a stand - make war profiteering illegal. President Roosevelt said, "I don't want to see a single war millionaire created in the United States as a result of this world disaster". Harry Truman referred to war profiteering as 'treason'. And in 1953, at the height of the Cold War, President Dwight Eisenhower, a real war hero, said, "Every gun that is made, every warship launched, every rocket fired, signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed."

When he heard rumors of such profiteering, Truman got into his Dodge and, during a Congressional recess, drove 30,000 miles paying unannounced visits to corporate offices and worksites. The Senate committee he chaired launched aggressive investigations into shady wartime business practices and found "waste, inefficiency, mismanagement and profiteering," according to Truman, who argued that such behavior was unpatriotic. Urged on by Truman and others in Congress, President Roosevelt supported broad increases in the corporate income tax, raised the excess-profits tax to 90 percent and charged the Office of War Mobilization with the task of eliminating illegal profits. Truman, who became a national hero for his fight against the profiteers, was tapped to be FDR's running mate in 1944.

In 2003, United for a Fair Economy did a study of defense contractor CEO pay that is worth taking a look at. (Download the .pdf here.) There is a direct correlation between the size of campaign donations and the size of defense contracts. The study found that:
Median CEO pay at the 37 largest defense contractors rose 79 percent from 2001 to 2002, while overall CEO pay climbed only 6 percent, according to a new report from United for a Fair Economy, More Bucks for the Bang: CEO Pay at Top Defense Contractors, by Chris Hartman and David Martin.

Median pay was 45 percent higher in 2002 at defense contractors than at the 365 large companies surveyed by Business Week magazine. The typical U.S. CEO made $3.7 million in 2002, while the typical defense industry CEO got $5.4 million.

The jump in median defense contractor CEO pay far exceeded the increase in defense spending, which rose 14 percent from 2001 to 2002.

Compared with an army private’s pay of $19,585, the average CEO at a major defense contractor made 577 times as much in 2002, or $11,297,548. This is also more than 28 times as much as the Commander in Chief’s salary of $400,000.

The study also looked at the size of campaign contributions by the largest defense contractors and found a strong correlation between campaign contributions made by a company in the 2000 and 2002 election cycles and the value of defense contracts awarded to that company. Ninety percent of the difference in contract size can be accounted for by size of contributions. For example, top arms contractor Lockheed Martin was also the top campaign contributor among defense firms.

The 37 companies included in the CEO pay study were all the publicly-traded corporations with at least $1 billion in total defense contracts from 2000 through 2002. The list includes well-known defense contractors like Lockheed Martin, Boeing, Raytheon, Northrop Grumman, and General Dynamics, as well as some companies not usually associated with military spending, such as FedEx and Dell Computer. Compensation was defined as salary, bonus, “other compensation,” restricted stock awards, long-term incentive payouts, and the value realized from the exercise of stock options.

People, let's be real.

That's what's put us in Iraq, that's what's keeping us in Iraq. This is 'War A-Go-Go', as Country Joe said, and 'there's plenty good money to be made supplying the army with the tools of the trade'.

How ironic that the Kowboy Koward of Krawford is making his first trip to Vietnam right now. As we muddle and muck through this terrible quagmire, American soldiers' lives are still being traded for profits. I can't imagine how difficult it would be to get a law passed today against war profiteering, but I can guaran-damn-tee you that the contractors would be out of there so fast it would make your head spin.

And our kids could come home.

What if they gave a war and nobody came? 

As President, Truman "lowered the boom" on both these crooked military procurement industrialists and their Congressional cronies, accumulating some powerful political enemies along the way.  He openly characterized the practice as "treason," and supported moves to make it not only illegal, but also a crime with definite prison terms for those involved.

The important point here is not a simple re-hash of who was doing what during the Truman years, but instead, a description of the "pivot point" Truman used to trigger such prosecutions.  That pivot point was the fact that the United States had formally declared war on Japan.  This fact validated what might have otherwise been interpreted as a regulatory "incursion on the free market."

Later in Truman's Presidency, the United States found itself in the "UN police action" defending South Korea.  Much of the anti-profiteering law from WWII was, once again, challenged precisely because the conflict was an "undeclared war," and, just as one might expect, the profiteers had re-insinuated themselves into the military procurement business.  

In an effort to protect the scam, corporate money gushed into the project of making the "police action" as politically unpalatable as possible to the US public.  We need to also remember that the "foe" was, rather than a military opponent, characterized as an incendiary, collectivist, sub-human monster of Godless Communism.  

The following is excerpted from a 2006 post on Field Guide to US EconomyRead the entire article here.

Congress Fails to Investigate or Punish War Profiteering

Wednesday, October 25, 2006 by Center for Popular Economics  
The following post is the text of a radio commentary I (Mike Meeropol) delivered over WAMC radio in early October.

Did you know that the US Congress has rejected efforts to punish, investigate and criminalize war profiteering?

Yes, that's right. This past February, the House on a mostly party-line vote rejected an effort to forbid expenditures from going to any contractor, if the Defense contractor audit agency has determined that more than $100,000.000 of the contractor costs involving work in Iraq were unreasonable.

Meanwhile, the Senate on an equally party-line vote, rejected an amendment to an appropriation bill to prohibit profiteering and fraud relating to military action, relief and reconstruction.

What's going on here?

The key to understanding this issue is in attempting to define the term "war profiteering." Can we be precise or must we accept an "I know it when I see it"  position as did former Supreme Court Justice Potter Stewart, about pornography?

Whenever a nation goes to war and buys supplies and equipment from private businesses, unless the government forces businesses to sell at a loss, the deal will lead to increased profits. But profiteering and merely profiting are different concepts. Profiteering implies that profits are too high. But how is that possible? How can a price voluntarily arrived at between two parties -- one party the US government --  be too high?

Well, one way is if the business fails to deliver the product promised. The business gets its money and the government gets little or nothing of what was promised. Anecdotal evidence abounds in any war.

This is clearly fraud and should be punished severely.

But what if the product paid for is actually delivered? How do we define war profiteering then? The only economic argument would be that the price charged and the profit earned is much higher than the price and profit that would have been high enough to induce the business to supply the particular product. In other words, if there were no war, the business would be satisfied to get, say, a 20 % profit,  but now they're getting 40%.

Why does a business gets such a great deal? Because there's little or no competition, and because the government is very anxious to get production started quickly. Because the stakes in wartime are so high, these extra costs don't seem to matter at the time.  But of course they do.

The House Bill proposed to allow the Pentagon's own internal audit agency to investigate whether any defense contractor was either padding costs in order to commit fraud or overcharging in other ways. Note that each contractor under that proposed bill would have $99 million in "wiggle room" — only "unreasonable" charges over $100 million would trigger sanctions.

During the Korean War Congress decided that all businesses were probably going to earn quite high profits and an excess profits tax was imposed. They didn't even bother to discriminate between unreasonably high profits and just high profits. That made some sense because it is difficult to prove that a specific cost charged is "unreasonable." Such an allegation would certainly be contested and the time it would take to settle the matter would be time wasted and remember there's a war on!

So there was an excess profits tax during the Korean War. By the way, this very high tax did not interfere with procurement -- there is no evidence that Korean War soldiers were short on equipment.

Given the Bush Administration's unwillingness to support any tax increase, the Korean War solution was never an option during this war. So why weren't the proposals aimed at punishing and investigating specific acts of war profiteering unanimously approved? Why were they defeated in partisan votes?

The answer lies in the difficulty of proving the existence of war profiteering. What Republicans probably feared was that efforts to punish war profiteers would degenerate into a partisan effort to make the President and his big business buddies look bad with lots of charges and no real resolution of the problem. An effort ostensibly to pursue war profiteers would, in the end, contribute to reducing the public's support for Bush's war.

I would guess that's why Republicans including NY State Republicans voted against it.

Corpses and Crimes With Different Values

When it was becoming clear that the US military adventure in Afghanistan was both losing its lustre as a domestic political tool and beginning to be a "cost to value over run" during the autocracy, stage one of the oil scheme had been realized.  The American electorate had become immured to carefully managed prospect of continuous political warfare, that is, "battle hardened"  in the civilian sense.

When the initial rampaging glee of the autocracy's memorable "one liners" and the 21st Century version of good old Spanish-American War yellow journalism had begun to die off in both conflicts, the full "cold steel" reality of being at war could still be avoided because of the number of contractors in the combat arena.

Well Financed Yellow Journalism As A Perpetual Cause For War (image source Wiki)

While military "war dead" presented the predictable public relations problem, dead contractors were relegated to a far less empathetic role.  After all, these participants had been receiving high compensation all along.  In the combat discipline sense, this disparity extended to widely varied degrees of  accountability where infractions to the prevailing rules of engagement had very different consequences. 

In this sense, "contractor war" became somewhat less hideous than exclusively "military war" as more and more of the damages could be conveniently placed in some service corporation's "chart of accounts" rather than Arlington National Cemetery.

From the Grocery Cart To Halliburton

There has always been a "ready to go" clutch of well connected war profiteers for every conflict the nation has encountered, however, few of them enjoyed the wide open check book available from having a convenient overlap between the Board of Directors and the Secretary of Defense. 

In fact, the most modern case enjoyed advantages beyond this simple, auspicious beginning.  That Secretary of Defense became the Vice President, and in the minds of many Americans, the acting President during the same period as the wars continued.  What passed as a Declaration of War emerged from the Congress as a "Authorization" to use military force, conveniently avoiding all the Truman statutory regulations against war profiteering.

From Smoking Mirrors Blogspot, August 2007.  (All links are enabled.  Visit the original site here.)

Monday, August 6, 2007

Dov Zakheim and the Missing Trillions.

What is the most outrageous piece of news that isn’t being discussed? I would venture to say it is the strange tale of Dov Zakheim and the missing trillions. I hear all kinds of numbers. I hear 2.3 trillion from Rumsfield and I hear about one trillion that Zakheim can’t explain. Still, you’ll need to check the dates of Zakheim’s days in the saddle as Pentagon Comptroller and then you can wonder to your hearts content. There’s no doubt the money is gone and there’s no doubt about who should know where it went but…what do I know? I know one trillion dollars is a lot of money. Isn’t one trillion dollars a million million? Zounds!!!

Has the cost of the entire Iraqi incursion come to a trillion dollars yet? It certainly isn’t anywhere near 2.3 trillion. Why isn’t this under discussion? Is it just too big a thing, too enormous to comprehend, that our minds go blank when we think about it? Hmmm...

There are a number of researched sources for all of the details you need to get a grasp of the situation. I’m not going to go into that kind of detail here. It’s been done better than I can manage at places like here

and here

this last link gives you many further links. You might want to read some of this before you continue here. And you should probably read this

by the author of the first link.

The man at the center of this sub rosa controversy is Dov Zakheim. Here is what is said about him. He’s a dual national Zionist and also a Rabbi. He’s the co-author of this PNAC gem

or, he isn’t the co-author but he signed off on it and it was really written by Kristol and Kagan. I read different things and, having been burned once, I’m in no mood for putting anything out that isn’t just as close to the truth as I can get. If you read the sources I have given and you extrapolate out to some degree you will find that Rabbi Zakheim is right there in the bed and under the covers snuggled up tight with all the other names that keep coming up. You’ll also find an alarming amount of connections to 9/11. WTF?

Here are a few salient features that struck me. He resigned in March 2005 when it was discovered that a trillion dollars was missing

On September 10th, 2001 (note this auspicious ‘night before Christmas date) Rumsfeld announced that 2.3 trillion was missing.

Now wait a minute... doesn’t this come to over 3 trillion dollars? Is Zakheim responsible for all of it or part of it? Is it a mere trillion for him and someone else lost the rest? I’m relying on you to square this away for me. This blog is interactive.

How can you not account for this amount of money in this day and age with computers?

Why has this, along with other news, (such as the WTC being near condemned status, prior to the attacks, because of billions in required refurbishments) with which we are familiar, disappeared from the landscape?

Most importantly, what was a dual nationality cat like Rabbi Zakheim doing in charge of the Pentagon’s money supply? Forget that, what is Chertoff, another dual nationality cat doing in charge of Homeland Security?

You might find a number of things in this article interesting, one of which is this, "Chertoff allowed scores of suspected Israeli terrorists and spies to quietly return to Israel . In several cases, Israeli suspects working for phony moving companies, such as Urban Moving Systems from Weehawken, N.J., were caught driving moving vans which tested positive for explosives. On September 14, Dominic Suter, the owner of the moving company, which was found to be a Mossad front company, fled to Israel after FBI agents requested a second interview.

One group of 5 Israelis was seen on the roof of Urban Moving Systems videotaping and celebrating the destruction of the World Trade Center. These Israeli agents were returned to Israel on visa violations.

These Israeli suspects, and others, who had apparently transported explosives in the New York area, were allowed to return to Israel without being properly interrogated or their presence and activities in the United States having been vigorously investigated." (1)

Does it all sound like science fiction to you? Put “Chertoff dual nationality” into Google and see if you have enough time in your life to read the things you find.

Any time you start looking into the rabbit hole you run across the same names. There is this handful of people who constantly show up. Why are there continuous connections to Israel? As I have said before, I don’t enjoy having to reach these conclusions. There is no more heavyweight subject than Israeli involvement in 9/11. There is nothing that causes more screeching and name calling, slander and opprobrium. But... every time you look and everywhere you look, the same names, the same connections, the same events pop to the surface of the lake like a dead body and smell as bad.

Now, either this is the most fantastic, most outrageous set of coincidences of which there is no parallel in human history or... there is something to it.

What are so many members of one of the smallest groups of people in the world doing in so many sensitive areas of the American government? How come they have so many irrefutable connections to one of the biggest events in American history? Honestly, I just want some answers. I don’t know what to think and I don’t like having to think about and speak about things that can make me a target of powerful interests that seem to be in control of a whole lot of bad shit.

Now, once again, either there is something to all of this or it is an unbelievable chain of coincidence that defies reason. What do we make of this?

This website

had to remove it due to Zakheim’s lawyers. There’s a lot of information from several sources here

...I don’t speak to the truth of the contents. I’d just appreciate it if you would READ, THINK, REFLECT and REASON. What I have placed before you is a small, small portion of what you can find which all speaks to the same thing. And speaking of outrageous coincidences, what is Zakheim doing as Corporate Vice President of System Planning Corporation? ...more freaking coincidences. I’ve got more coincidences than there are illegal immigrants.

Unfortunately for me, this has gone way past coincidence and the circumstantial. This is some unknown animal hiding in plain sight. I don’t know what to call it. It can’t be coincidence or circumstantial, there are enough grains of sand here to create your own beach. It blares at me through klaxons. It’s screaming from rooftops. It’s dancing with ten thousand Broadway revues surrounded by all the lights of Las Vegas. I have to conclude what I fear to conclude.

How do we come to empirical fact? We get there by repeating experiments, by observation and by weighing evidence to the point where doubt is removed from our conclusions. I’d really appreciate the readers weighing in with their thoughts and any further information they might have. If it walks like a duck and talks like a duck and looks like a duck and you see it mating with other ducks and producing more ducks; what do you think it might be?

Halliburton continued to receive "emergency no-bid contracts," ordinarily reserved for pressing, unforseen necessities, year after dreary year.  A nice historical account of the news paper coverage this generated in the US is provided in a great compendium at Halliburton Watch.  Visit the site here. Although the entire body of this research could be a part time job for the winter, it is worth the time to "sniff around" to get a fuller picture. 

The outrage even continued in more formal settings. A Wartime Contracting Commission was established by Congress to track more of the missing contract dollars spent in both Afghanistan and Iraq.  That full report can be read here.

As the country is staggering under the relentless "money saving" and "spending cuts" of the current tea bag Congress, the scope of this scheme is curiously missing from the table.  However, MeanMesa visitors can "take it to the bank" that huge amounts of the "missing dollars" have ultimately found the pockets of corporatists like those who run Halliburton.

"Huge amounts?"  Yes. More than enough "missing money" to triple or quadruple the amounts recently cut from the Federal deficits during the spending cut fiascos which most recently jammed another stake through the entire global economy.  While contractors such as the well connected Halliburton are frolicking in cash tsunamis, the country's tax payers are being asked to slice and dice Social Security, let bridges collapse, public schools leak, levees fail and so on.

Don't Bother to Buy This Book

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